Say "No!" to Fiscal Child Abuse

Submitted by JulianD on Thu, 2009-05-28 00:40

Press Release: Libertarianz Party

Say "No!" to Fiscal Child Abuse

With the National/ACT government about to release its first budget, Libertarianz Deputy Finance Spokesman and Auckland economist Mr J Darby warned that deficit spending, funded by borrowing, will have implications for the youngest in society. "An unbalanced budget has to be funded, and if this is funded by additional borrowing, then future generations will bear the burden of paying off the debt. This is 'fiscal child abuse'," said Darby. “A responsible political party and government would, at the very least, balance the budget," he added.

Instead, in its first budget, the National/ACT government appears to be about to fund a series of deficits by borrowing, thereby mortgaging the lives of future generations. "While this demonstrates that they are irresponsible, what is outrageous is that they are about to renege on their promise of tax cuts, a promise which formed a central part of their election campaign," noted Darby. "To blame the recession for breaking this promise is no excuse, for the effects of the recession were well known to everyone when this promise was made. They are either incompetent, or they willfully lied in order to get onto the Treasury benches," continued Darby.

Libertarianz support tax reductions in all their forms. In fact, tax cuts are more important than ever so that money is returned to the productive members of society; for it is they who create wealth and jobs. It follows, therefore, that breaking the promise of tax cuts would hinder any recovery of New Zealand's economy.

Darby pointed out that tax cuts must be accompanied by equivalent reductions in government spending. "It is essential that government spending is slashed. Many government departments and programmes can easily be eliminated saving significant sums of money and allowing the promised tax cuts to proceed. And yet," highlights Darby, "this government has shown no interest in meaningful spending cuts. On the contrary, they are about to embark on a multi-billion dollar programme of spending on infrastructure and home insulation."

Finally, Darby issued a warning. "This government is about to engage in fiscal child abuse by mortgaging the lives of future generations. They do this while breaking their central election promise of tax cuts and while creating significant spending programmes which will also hinder New Zealand's economic recovery. Muldoon is alive and well in Wellington."

Disgraceful. David Farrar calls it a "budget that almost writes itself." That's almost true once you factor in broken promises on tax cuts, the inability of politicians to stop spending what they haven't got and the underlying values of the National Party.

So let's see what the promises both kept and broken add up to both in dollars and in values betrayed.

English promised over 5 billion dollars in extra spending over four years in areas -- health and education and feel-good crap -- where Labour's $20 billion spending binge had absolutely no net positive effect whatsoever. Which means they're keeping non-productive electoral bribes made for no other reason than headlines, and breaking their promises to productive New Zealanders who have to pay for this new blue binge.

He promised nearly one-third of a billion dollars to subsidise people who insulate ther houses. Which means they're keeping their commitment to their post-election deal with the Greens, while breaking their clear election promise to the productive taxpayers who voted for National.

He promised to consume over 7.5 billion dollars over five years in Think Big infrastructure projects (for which the RMA is already being prepared) all of which will have to be paid for out of borrowing -- which means they’re keeping their promise to borrow money to bid up the prices of contractors and building materials at the very time these prices need to fall.

He admitted that the total spending bill adds up to $17 billion or red ink over the next two years -- $17 billion that will have to be borrowed -- $17 billion that could have been used by productive New Zealanders in bankrolling genuine productive spending. So, if we remember John Key's commitment in the Wall Street Journal back in March, we might note he really is talking Adam Smith abroad while spending like John Maynard Keynes at home -- which means he must think either local commentators are stupid or Wall Street Journal readers don't do their homework.

And, of course he committed to maintaining "entitlements" -- what used to be called welfare payments -- meaning the likes of Welfare for Working Families, interest-free student loans, subsidised state-housing and the like which National (at one time) actually campaigned against. This means they're keeping their belated promises to the moochers, while breaking their firm commitment to the productive, i.e., the people paying for it all.

Asked by David Farrar "what their rationale was for deciding to break a tax cut promise rather than a spending promise such as interest-free student loans (especially as he originally opposed interest free student loans but always campaigned for tax cuts) English responded that people feel insecure in a recession, and they made a decision not to cut any current entitlements to help confidence and security."

My colleague Julian Darby warned this morning about the "fiscal child abuse" that has just been announced. I characterised the Budget this morning as a Liars' Budget. And so it is. But it's very revealing to look at those to whom they're happy to lie, and and who they think it's important to keep "confident and secure."

If you want to understand the values of today's National Party all you need to know is that they think it's important to keep their promises to moochers, but okay to lie to productive New Zealanders on whose shoulders the whole country actually rests.

If you're one of those heroes and you voted for these lying cheats, then you've been conned - as you have been if you voted ACT, whose MPs are lining up as we speak to vote this Budget in.

As Johnny Rotten once asked his audience, "Ever get the feeling you've been cheated?

The National Party site gives the best canon fodder. Their objectives again:

The National Party was founded on principles of individual responsibility, private enterprise, and reward for individual effort. These principles are the only sure path to a society of personal freedom and rising standards of living for all.

We value honesty and fairness, hard work, respect for achievement, and integrity. These virtues underpin successful societies by reconciling the dynamism of free enterprise and the freedom of expression we value in a modern society,

Will have to be you I'm afraid, unless you can wait until later tonight. Despite the distractions I've got a job that has to be done by 5.30. If you've not got one up by then, I'll pen one. (In the meantime I've left my righteous indignation on a couple of economics blogs).

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